Posts from March 2007

Friday, March 02, 2007

In Wholesale Electricity Antitrust Cases I & II, ___ Cal.App.4th ___ (Feb. 26, 2007), the Court of Appeal (Fourth Appellate District, Division One), held that the Federal Power Act and implementing regulations of the Federal Energy Regulatory Commission preempted the plaintiffs' UCL and Cartwright Act claims. From a UCL standpoint, this is the most interesting paragraph in the opinion:

In the UCL context, in Spielholz[v. Superior Court], 86 Cal.App.4th 1366 [2001], those plaintiffs were allowed to proceed with false advertising allegations that a telecommunications carrier had falsely advertised a "seamless calling area" existed, where in reality, there were gaps where wireless telephone users were unable to connect calls. The Court of Appeal found no federal preemption of such claims, because the main allegations dealt with false advertising, such that any effect on rates was merely incidental. Here, however, as stated by the trial court, "This can be contrasted to the instant case, involving the FPA, where Plaintiffs' allegations concern conduct directly related to rates charged and ultimately paid." We agree with the trial court's analyses of the California case law claims, because plaintiffs have been unable to show why the alleged anticompetitive conduct by defendants inflicted any different kind of injury on them, that is separate from the rates charged and ultimately paid. This is not a case in which incidental damages are claimed to arise from conduct that is not covered by the federal legislation, such as false advertising.

Thursday, March 01, 2007

In a blow to labor unions seeking to enforce [certain wage and hour] protections, the Second District Court of Appeal ruled Wednesday(.pdf) that employees cannot transfer the ability to sue in a representative capacity.

The time I had yesterday to review and analyze this decision was limited. One thing that's not entirely clear to me is whether this decision answers the question about Proposition 64's impact on the rules of associational standing. The decision did not use that terminology, and I'm not 100% sure if the union's argument was, in fact, based on associational standing principles. Perhaps someone else who has had more time to look at the opinion and is familiar with these principles would like to post a comment.

(1) We agree the Unions have standing as assignees to assert the claims of union members who have assigned to the Unions their rights to recover wages owing to them. The Unions may not, however, assert claims on behalf of members who have not assigned their claims to the Unions. An assignment purporting to transfer to the Unions “my right to sue in a representative capacity on behalf of current and former employees” is not a transfer “by the owner” of “a right to recover money or other personal property” within the meaning of Civil Code sections 953 and 954. Nor is such an assignment the transfer of an “injury in fact” from assignor to assignee that confers standing on the assignee within the meaning of Vermont Agency of Natural Resources v. United States ex rel. Stevens (2000) 529 U.S. 765 (Vermont Agency). Consequently, the Unions do not have standing under PAGA or the UCL to assert the rights of members who have not assigned their recovery rights to the Unions.

(2) We further conclude that the UCL requirement that a person pursuing relief on behalf of others must both meet standing requirements and “[compl[y] with Section 382 of the Code of Civil Procedure” means, as stated in the Voter Information Guide for Proposition 64, that unfair competition lawsuits on behalf of others, initiated by persons other than the Attorney General and local public prosecutors, must “meet the additional requirements of class action lawsuits.” (Voter Information Guide, Gen. Elec. (Nov. 2, 2004) analysis of Prop. 64 by Legislative Analyst, p. 39 (hereafter Guide).)

Slip op. at 5-6. One justice dissented from the first of these two holdings.